1. You are completing analytical procedures (ratios) for the audit of sales and accounts receivable. Identify 3 ratios and their trend (increased/decreased) which may indicate that net sales and/or net accounts receivable may be overstated. Explain.

(3 marks)

Item	Ratio	Increased/decreased - Explain
1
2
3

2. What are the effects of overstating ending inventory on Cost of Sales, and Profit (understate/overstate)? Explain.

(2 marks)

Effect on Cost of Sales
Effect on Profit